Ditch The Traditional Piggy Bank And Try These Simple Ways To Teach Money Management To Kids

For most of us, one of our favourite childhood memories must be our piggy bank, isn't it? How excited we used to be to save a little bit of money to buy whatever we wanted. For everything related to money, piggy banks were our first encounter with the importance of savings. However, with the new generations and new mindsets, lifestyle preferences, etc., the age old tradition of giving a piggy bank to children also needs to change. Read on to know some super smart ways to teach money management skills to kids.

1. Open a kid's savings account for them and incentivise their savings

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With many banks offering the facility of special savings accounts for children, why not utilise this revolution of digitisation? You can open kid's savings account in many ways, like a separately handled account by the minor, one under your guardianship or a joint account as well. Then you can straightaway deposit a certain amount as pocket money into that savings account every month. And that's not all. You can keep them interested in saving money by paying the kids a monthly "parental interest" when they are able to save the target amount in that savings account. It can be any proportion, whether 20% or 50% . This way, children would not only remain interested in saving more in order to earn those extra bucks, but also understand the valuable concept of compounding when they see their money growing every month through rising bank balance.

Also Read: Lifelong Money Lessons That COVID Lockdown Taught Us

2. Set tasks to ¡®earn¡¯ their pocket money

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Another way of teaching the importance of money to your kids is by setting day to day, weekly or even monthly tasks, completing which would earn them a particular sum of money from you. The tasks can be related to homework, helping in household chores, learning new things not included in school syllabus, etc. This way, your child will not only grow in various aspects of life by attempting to complete those tasks, but also realise the efforts it takes to earn pocket money.

3. Make them tick off their wish list themselves

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Every child has a long wish-list field with things they wish to buy or experiences they wish to enjoy someday, like playing water sports, buying a carton full of chocolates or their favourite superhero costume. What you as a parent can do here is, instead of fulfilling their wish-list all by yourself, make the kids save from their pocket money and then tick off something from that wish-list themselves. That way, they will understand the value of money and also appreciate the importance of that prized possession or experience.

Also Read: 5 Money Lessons From Hollywood Blockbusters

4. Lead by example

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Actions speak louder than words. This holds true for parent-child relationships as well. Instead of giving them hours of lecture on money, leading by example is probably the best way to make them learn the importance of money. Like, when you go shopping, show them how to differentiate between various prices of an item, whats expensive and whats worth the mentioned price. You can even try handing over some money while shopping and ask them to buy as much as they can within that amount, while ensuring the things bought are useful as well. Moreover, you can share your money learning and experiences with them, involve them in household budgeting or money talks as well, to give them a glimpse of what the world of money is about.

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